According to the ACFTU, the collective wage negotiation system works more effectively with enterprises in labor-intensive industries.

Wenling of east China's Zhejiang Province is a major woolen sweater production base with hundreds of enterprises involved in the industry, hiring more than 10,000 workers between them.

Employers, in order to reduce costs, would lay off workers during the off-peak season. When business picked back up, local companies found it difficult to keep skilled workers who were tempted by competitors using the lure of higher wages.

"Conflicts between employers and employees in the past were often quite tense and some workers turned to the local government for help," said Chen Fuqing, Chairman of the Woolen Sweater Industry Trade Union in the city's Xinhe Town. "The unstable flow of labor jeopardized the industry's development in the town."

The trade union led by Chen, the first industry-based labor organization for private companies in Zhejiang, was established In August 2003. On behalf of migrant workers, it negotiates with employers over wage claims.

At the end of summer every year, around September, the local Woolen Industry Association that represents employers submits its initial pay and bonus proposal for the coming year, based on a market assessment, to the trade union. A group of more than 100 worker representatives is then organized to discuss the wage proposal and hold a secret ballot at which they decide theirs.

Both are then discussed by the trade union and industry association, and after rounds of negotiations between employers and workers, a mutually acceptable salary is agreed upon.

The fixed salary standard, detailing different pay scales according to the type of work and covering the entire production process, is then made public and standard pay levels are adjusted each year in line with market demand and economic conditions.

This process also took place in 2012 among the cap-making industry in Nanjian Village in Xinhe. After the negotiation between 106 worker representatives and 380 employers, they finally agreed to raise workers' wages by 10 percent on average.

"The collective wage negotiation system has greatly changed the way recruitment is done in the town, and creates a good development environment for the industry," Chen said.

The off-peak season did not see an exodus of workers as before, indicating an unprecedented sense of worker loyalty and security, said Wang Xinfa, President of Xinhe's Woolen Sweater Industry Association. "Employers can concentrate on business management rather than fighting with other companies for skilled workers, or dealing with labor disputes."

With the encouraging results that were achieved, businesses in other regions have followed suit.

The Dasailu Food Processing Co. Ltd., located in Nanning, capital city of Guangxi Zhuang Autonomous Region, used to operate at a loss and had an unstable flow of employees. After Chen Ningde, chairman of the company's trade union, introduced the wage negotiation system to the company's management team and persuaded them to adopt it in 2011, more employees chose to stay longer.